M&A M&A MonthlMonthlyyp Report – March 2010 · $1.4 billion under management. LLR Partners helps talented entrepreneurs grow their businesses by providing capital, st rategic counsel,

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M&A M&A Monthly Report Monthly Report –– March 2010March 2010y py pPrivate Equity – The Biggest Buyer of All!

Thursday, March 4, 201010:00 am PT

www.corumgroup.com

Presenters

Tomoki YasudaAnalystCorum Group Ltd.

Mark ReedExecutive Vice PresidentCorum Group Ltd.

Ward CarterChairmanCorum Group Ltd.

Corum Group Presentation ■ 2

>> For today’s presentation or more information, contact Pat Sultan([email protected], +1 425-455-8281 ext. 248)

Agendag

Overview of Current Global Market

Market and Valuation Analysis

Private Equity Panel

Closing Comments Q&A Closing Comments - Q&A


US Economyy

G Business Activity Expanded – GDP Topped Estimates

Consumers Outlays, Manufacturing Start 2010 on Positive Note

Fed Stresses Need for Continued Low Rates

Senate Approves Job-Creation Bill

Factories Set to Rehire

Mortgage Delinquencies Edge Down

Lending Falls at Epic Pace

Fear Over… Obama’s New Investment Tax


Euro Zone

G f Greek Protesters Assail Plan to Trim Deficit

The Euro’s Next battlefield: Spain

Germans Consider Bank Rescue for Greece

Europe, Asia Markets Rally on Greece Bailout Plan

UK Sees Stalled Euro-Zone Recovery

Debt Deals Haunt Europe


Asia/Middle East/ROW

’ O Recall Dims Japan’s Export Outlook

Are Cracks Forming in BRICs?

Debt Threat to Kuwait Investment Houses


Technologygy

S f $ Off Novell Soars after Elliot Makes $2 Billion Offer

Mergers, Acquisitions Seen Gaining Steam

Cash Rich Firms Snare Rivals in Flurry of Deals

Tech Earnings Reports are Up

Can Anyone Rescue Palm from Its Death Spiral?

Strategic Deals to Drive M&A in 2010

Return of the IPO Market?

Continued Strong Cross-Border Activity


Technology & Private Equitygy y

Intel Forms Funding Alliance

Total PE Deal Flow 2009 Down Dramatically

More Focus on Add-Ons as Private Equity Steps Up Pace

Anemic Outlook for PE Fundraising in 2010

Recovery of Debt Markets Has Been Slow

Expect More IPOs of Portfolio Companies

Strong Competition among Funds for Fresh Capital


Private Equity for Your Exit Strategyy gy

C Technology Executives Must Consider PE

Pool of Equity for Growth Investments, Recapitalizations, and

BBuyouts

Portfolios Rich in Complementary Technology

Tech is Still Ripe for Private Equity Funds Searching for High

Returns


Market and Valuation Analysisy

Tomoki YasudaAnalyst

T ki i tl l t ki t C ’ h d t i B th ll WA At C

Corum Group Ltd.

Tomoki is currently an analyst working at Corum’s headquarters in Bothell, WA. At Corum, he is responsible for conducting research and market analysis on companies, the economy, and valuations. He has a dual degree in Economics and International Studies from the University of Washington and is a contributor to Corum’s monthly webinars.


Public Markets

Nasdaq S&P Tech Dow

100 00

110.00

120.00

80 00

90.00

100.00

60.00

70.00

80.00

40.00

50.00


Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10

M&A Activity – Februaryy y

Number of Software and IT M&A TransactionsNumber of Software and IT M&A Transactions

340

247

181

268

February

153

193

299

340February

0 50 100 150 200 250 300 350 400

2010 2009 2008 2007 2006 2005 2004


Corum Index – M&A Statistics

Corum IndexFeb‐09 Feb‐10

# of Transactions 181 268# of Transactions 181 268# of Mega Deals 0 3Largest Deal $488 $2,300Average Deal Size $41 $150Median Seller Size $25 $16# VC backed Exits 22 35% Terms Undisclosed 74% 81%All Cash (announced) 55% 72%

*$ values in millions

All Cash (announced) 55% 72%% Targets were Public 20% 10%% Public Buyers 48% 49%


Horizontal Application Software Market

Public Valuations Deal Spotlight:

Sector: Content ManagementTarget: Nstein TechnologiesBuyer: OpenTextTransaction Value:$33.5 million1 5x revenues

HorizontalApplicationSoftware 1.5x revenues

Structure: Cash

Comments: Text Mining Engine

Fi i l T


EV/S 1.12 x 1.12 x 1.16 x 1.35 x 1.50 x 1.58 x 1.93 x 2.41 x 2.21 x 2.29 x 2.41 x 2.48 x 2.42 x

Software

Financial Terms Expanded WCM Portfolio

EV/EBITDA 5.85 x 6.82 x 9.23 x 9.39 x 9.99 x 11.06 x 11.06 x 12.67 x 12.26 x 11.66 x 11.67 x 10.76 x 11.16 x


Vertical Application Software Market


Sector: Data ManagementTarget: Initiate Systems, Inc.Buyer: IBM Corp.Transaction Value: $425 million4 7x revenues

Vertical ApplicationSoftware 4.7x revenues

Structure: Cash

Comments: Vertical Targeting

D f i D l?Feb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10

EV/S 1 01 x 1 14 x 1 31 x 1 40 x 1 51 x 1 51 x 1 66 x 1 80 x 1 57 x 1 82 x 2 01 x 1 90 x 1 92 x Defensive Deal? M&A Wave




Consumer Application Software Market


Sector: MobilityTarget: reMailBuyer: Google, Inc.Transaction Value: UndisclosedStructure: N/AConsumer

ApplicationSoftware

Comments: Apple – Google Cold War Companies Aligning Themselves Opportunity for InnovationFeb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10


Software



Infrastructure Market


Sector: StorageTarget: Mimosa Systems, Inc.Buyer: Iron Mountain, Inc.Transaction Value: $112 million5 1x Revenues

Infrastructure Software

5.1x RevenuesStructure: Cash

Comments: On-Premise/Hosted Difference

D t A hi i E di


EV/S 1.31 x 1.43 x 1.55 x 1.52 x 1.72 x 1.95 x 2.02 x 2.14 x 2.20 x 2.27 x 2.37 x 2.30 x 2.24 x Data Archiving ExpandingEV/EBITDA 6.32 x 6.98 x 8.46 x 8.29 x 8.74 x 9.59 x 10.92 x 10.46 x 10.81 x 9.76 x 11.61 x 10.26 x 9.83 x


Internet Market


Sector: Pure PlayTarget: Yahoo! (HotJobs Assets)Buyer: Monster WorldwideTransaction Value: $225 millionStructure: Cash

Internet

Structure: Cash

Comments: Divestiture Monster SlumpFeb‐09 Mar‐09 Apr‐09 May‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10 Feb‐10

EV/S 1.36 x 1.60 x 2.11 x 2.26 x 2.30 x 2.48 x 2.60 x 2.70 x 2.19 x 2.45 x 2.55 x 2.34 x 2.36 x/



IT Services Market


Sector: IT ServicesTarget: Unisys (Assets)Buyer: Marlin Equity PartnersTransaction Value: UndisclosedStructure: N/AIT Services

Comments: Acquires Payment Systems Assets Return of Burroughs Name Brand Recognition





Private Equity Panelistsy

David ReuterLLR Partners

David GolobFrancisco Partners

Michael WandCarlyle Europe

Technology Partners


Carlyley

Michael WandManaging Director, Co-headCarlyle Europe Technology Partners

Michael Wand is a Managing Director and Co-head of Carlyle Europe

Prior to joining Carlyle in 2001 Mr Wand worked for approximately 10 years in investment banking the last seven

g g y pTechnology Partners, a team of dedicated investment professionals who focus on European growth capital and buyout opportunities in a variety of sectors including media, software, telecom, aerospace and defense, healthcare and technology. He is based in London.

Prior to joining Carlyle in 2001, Mr. Wand worked for approximately 10 years in investment banking, the last seven years in the technology sector. As a Managing Director, he was responsible for the European software and internet research team at Deutsche Bank in London. Prior to that, he worked as a European Software Analyst for Paribas in London and BHF-Bank in Frankfurt, Germany. During his banking career, Mr. Wand was the underwriting analyst for technology innovators such as SAP, Autonomy, SurfControl, Utimaco and nCipher.

Mr. Wand received his M.B.A. from Mannheim University in Germany and the University of Texas at Austin. He holds a B.A. degree in economics and business administration from Mannheim University in Germany. He has been registered with FSA from 2001 to the present.

Mr. Wand is currently a member of the Board of Directors of FRS Global, KCS.net Holding AG and UC4 GmbH, d i Ch i f th S i B d f P l & I f tik AG Hi i i t t i l d A


and is Chairman of the Supervisory Board for Personal & Informatik AG. His previous investments include Apama, Inc. (now part of Progress Software) and SmartTrust AB.

Francisco Partners

David GolobPartnerFrancisco Partners

Mr Golob has been a Partner with Francisco Partners since joining the firm in September 2001 From 1998 to

Francisco Partners

Mr. Golob has been a Partner with Francisco Partners since joining the firm in September 2001. From 1998 to 2000, Mr. Golob was a Managing Director with Tiger Management, where he was co-head of the global technology group and focused on the software industry. Prior to Tiger, Mr. Golob spent several years as a private equity investor focused on the software industry at General Atlantic Partners and Sutter Hill Ventures. Earlier in his career, Mr. Golob was a management consultant with McKinsey & Company and a Product Manager with Newport Systems Solutions, Inc. (acquired by Cisco).p y ( q y )

Mr. Golob serves on the board of directors of Attachmate, Barracuda Networks, City Index, Foundation 9 Entertainment, GXS, and RedPrairie, and previously served on the boards of ADERANT (sold to a financial buyer), Office Tiger (sold to RR Donnelly), and Primavera (sold to Oracle). Mr. Golob holds an A.B. in chemistry from Harvard College, summa cum laude, and a M.B.A. from the Stanford Graduate School of Business.


LLR Partners

David ReuterPartnerLLR Partners

David Reuter is a Partner with LLR Partners Inc., a private equity firm with over p q y$1.4 billion under management. LLR Partners helps talented entrepreneurs grow their businesses by providing capital, strategic counsel, and access to the Mid-Atlantic region's most extensive business network. LLR Partners invests in a broad range of growth industries, with a focus on expansion capital, buyouts, and negotiated investments in public companies. Mr. Reuter manages LLR Partners’

ft d fi i l i i t t

Prior to LLR, Mr. Reuter held various positions in the Growth Company Practice of Arthur Andersen LLP, which provided accounting and consulting services for the leading growth companies in the Greater Philadelphia region. He provided management consulting services including financial analysis, market research, merger and acquisition transaction support, due diligence, and business valuation as well as audit and accounting services

software and financial services investments.

acquisition transaction support, due diligence, and business valuation as well as audit and accounting services across a broad range of industries. Prior to Arthur Andersen, Mr. Reuter provided consulting in sales, marketing, and strategy to middle market enterprises.

Mr. Reuter holds a B.S. in Business and Economics from Lehigh University, where he graduated with honors. He serves on the Board of Directors of the Greater Philadelphia Venture Group and Urban Blazers Foundation. He is


a Certified Public Accountant and a member of the AICPA and PICPA.

Private Equity Panelistsy

David ReuterLLR Partners

David GolobFrancisco Partners

Michael WandCarlyle Europe

Technology Partners


Contact Information

Corum Group Ltd.

Ward Carter, [email protected]

Mark Reed, Executive Vice President,[email protected]

Tomoki Yasuda, [email protected]

Corum Group International S.à.r.l.

Buechenstr 919805 North Creek Pkwy, Suite 300Bothell, WA 98011USA

Buechenstr. 9CH-8185 WinkelSwitzerland

+41 43 888 7590

Research and Conferences:

+1 425-455-8281


Research and Conferences:www.corumgroup.com

M&A M&A MonthlMonthlyyp Report – March 2010 · $1.4 billion under management. LLR Partners helps talented entrepreneurs grow their businesses by providing capital, st rategic counsel,

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